UNITE HERE!

UNITE HERE!  distributed the following facts to our elected representatives in Annapolis that lists O'Malley's friend, Penn National Gaming's national trail of broken promises and hardball tactics. Do Maryland taxpayers really want to trust a Company with this kind of track record?

Broken Promises and Hardball Tactics

Legislative Research Report                                    Roxie Herbekian

March 14, 2011                                                          (301)651-8526

                                                                                    rherbekian@unitehere.org

Penn National Gaming has a history of breaking promises and using hardball tactics against states and local governments.  On February 3^rd of this year, Penn National Chairman and CEO Peter Carlino said, “We planted a large flag in Maryland, and we’re there for the long haul.”  But Penn National’s commitment to Maryland has been “on” one minute and “off” the next.  According to the Washington Post, the pattern of broken promises started in 2007 when Penn National initially committed to buy Rosecroft Raceway, promising that the purchase was “not contingent on the approval of video lottery terminals at the track.”  Then, Penn National withdrew its offer when the track did not get slots.

In 2010 Penn National joined in the Maryland Jockey Club’s attempt to wrest away a slot license from the Arundel Mills Casino.  According to the Baltimore Sun, when the Maryland Lottery Commission discussed taking action in response, Penn National took the unusual step of asking the commission to delay issuing its Perryville license.  By threatening to delay the opening of its Perryville casino, Penn risked depriving the Maryland Education Trust Fund of $6.5 million in revenue from the casino’s opening through November 1^st, 2010. 

Despite agreeing to the terms before it “planted its flag” in Maryland, Penn National sought to have a competing casino eliminated.  Maryland is not a unique case:  Penn National has a history of conflict with governments in other jurisdictions, including Ohio, Kansas, and Illinois:

•  Penn National is considering moving Raceway Park away from Toledo after promising the

   city it would keep the track open, according to the Toledo Blade

•  Penn National is demanding $8 million in annual tax breaks for its casino in Columbus after

   spending $24 million to win the right to operate slots in the state, according to the

   Columbus Dispatch

•  Penn National benefitted from a legislative push to overturn an Illinois Gaming Board ruling

   requiring it to divest itself of some of its casinos, according to the St. Louis Post Dispatch

•  Penn National allegedly broke a commitment to build a $250 million casino in Cherokee

   County, Kansas

“I Was Basically Lied to”

Rosecroft is not the only race track Penn National suddenly changed its plans for.  Penn National owns Raceway Park in Toledo, Ohio, and recently announced that it is investigating the possibility of relocating the racing license.  According to the Toledo Blade, fifteen months ago Penn National “unequivocally” stated they “have no plans to close Raceway Park.”  Toledo District 6 Councilman Lindsay Webb says that “I was basically lied to on the record,” by Penn National.

Penn National is apparently trying to squeeze Columbus taxpayers to add to their casino profits

First, Penn National spent over $24 million to back an Ohio State Constitutional Amendment legalizing casinos.  Then, the company asked Columbus for tax breaks for its casino, including $8 million annually to fund road work and other infrastructure for the project.  The request caught the city by surprise.  Prior to the referendum legalizing slots in Ohio, Penn National “repeatedly said it would pay for any necessary public improvements,” according to the Columbus Dispatch.  The city has so far refused to give Penn National the tax breaks.  Now, Penn National says it may oppose Columbus annexing its casino site, costing the city millions of dollars in lost revenues annually.  Penn National’s site is not covered by Columbus’ water and sewer services, according to the Columbus Dispatch.  Instead, Penn National filed permit applications with the Ohio DEP to drill wells to provide water for the casino.  According to the Columbus Dispatch a nearby city was approached by an ‘anonymous client’ – represented by Penn National’s project manager – who wants to truck in 120,000 gallons of raw sewage daily.  The Columbus Mayor’s spokesman Dan Williamson responded, “if they’re looking for leverage, maybe something less ridiculous.  It doesn’t pass the smell test.”

Penn National promises compliance with regulatory agreements – until they can get them overturned

As a condition of Penn National’s buyout of Argosy Gaming, the Illinois Gaming Board required that Penn National had to sell two riverboats in Illinois.  Penn National could ask the board to re-consider.  But according to the St. Louis Dispatch, in 2007 a bill filed with the legislature was amended to “overrule state gambling regulators who’d ordered the company to sell.”  The legislative effort failed, but ultimately the company got the regulatory decision it wanted and kept the casinos it had promised to divest.

Penn National “Bailed Out” on Cherokee County

Penn National planned to build a casino in Cherokee County, Kansas.  On April 9, 2008 the Kansas City Star reported that “Penn National Gaming is pressuring Kansas to back off a requirement in state law that companies invest at least $250 million in state gambling casinos.”  The Associated Press reported that Penn National sought the changes because of competition from a nearby casino owned by the Quapaw Tribe.  Penn National COO Timothy Wilmott said “we applied before the Quapaw were on anybody’s radar screen.”  But the record shows that the Quapaw Tribe broke ground for their casino on July 31^st, 2007, thirty days before Penn National filed its proposal on August 31^st of the same year.

The legislature rejected efforts to change the law, and Penn National cancelled the project.  According to the Kansas City Star, Penn National argued the casino “required too large an investment.”  Kansas State Representative Doug Gatewood disagreed, saying “I think they’re just making excuses right now.”  Cherokee County sued Penn National on September 11, 2008, seeking $53 million in damages alleging breach of contract.  According to the Associated Press two mediation sessions between the parties failed to reach a settlement, and the case will likely go to trial.

The Baltimore Sun: “Be skeptical about whether Penn National is the right partner”

After cancelling its deal in 2007, Penn National announced it acquired Rosecroft Raceway on March 1^st, 2011.  The Baltimore Sun reports that Penn National wants slots at Rosecroft, and is looking at selling its share of the Maryland Jockey Club.  An editorial in the Baltimore Sun written after Penn National announced its investment in the Jockey Club strikes true – “Horsemen should be skeptical about whether Penn National is the right partner, or if it’s just another entity looking to cash in on Maryland slots.”

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UNITE HERE! is the hospitality workers union that represents workers in the gaming industry across the country.  The Research Department provides research on the gaming industry from the perspective of those who work in the industry.